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Scoring of HELOCs vs HEL?

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Anonymous
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Scoring of HELOCs vs HEL?

Just took out a $50K HELOC that can be converted to a HEL at will. Can anyone here relate their scoring experience with a HELOC at $50k or above? Specifically, how was yours scored (as opposed to reported) by the credit bureaus - was it as a conventional revolving debt or as a secured  real estate loan? It's a fuzzy area and I need a straight answer because we want to raise our credit score by consolidating some debt in this manner. I have heard that for TransUnion - any HELOC above $35K is considered a real estate loan instead of conventional revolving debt. I don't know about Experian or Equifax. Your experience?

 

Thanks,

 

John

Message 1 of 7
6 REPLIES 6
MarineVietVet
Moderator Emeritus

Re: Scoring of HELOCs vs HEL?

Hello and welcome.

 

Our resident "expert" on this subject haulingthescoreup, AKA HTSU, should be along to explain this. You can also do a search here onsite about this subject.

 

 

 

From a BK years ago to:
EX - 9/09 pulled by lender 802, EQ - 10/10-813, TU - 10/10-774

"Some people spend an entire lifetime wondering if they've made a difference. The Marines don't have that problem".

Message 2 of 7
Lel
Moderator Emeritus

Re: Scoring of HELOCs vs HEL?

Unfortunately, I don't think you're going to get a definitive and immutable "straight answer".  Like you said, the way that HELOCs are scored is a little fuzzy, particularly since there are different versions of FICO in use through the three major credit reporting bureaus.  And part of the way they are scored is dependent on the way the HELOCs are reported to the credit bureaus.

 

For the newer versions of FICO - including Equifax's Beacon 5.0 (available here) and Transunion's TU 04 score (not available here) - if the account is described as "home equity" or "HELOC", then it will be scored as a mortgage account regardless of credit limit or if it's reported as revolving.

 

For the older versions of FICO - including TU 98 (available here) and Experian's v2 - the credit limit on the HELOC does matter.  The precise thresholds are not definitely known, but there's plenty of anecdotal reports that put this threshold somewhere in the $30,000-$50,000 range, varying with the bureau.  Hopefully others will chime in with their own experiences.  To further complicate things, there's at least one Forums member who has reported that the scoring of his HELOC flips back and forth between installment and revolving, if I recall correctly.

 

So, it's kind of a mixed picture.  For EQ, since Beacon 5.0 is the most widely used version, if the HELOC is described as being a HELOC or home equity loan, then it will scored as installment/mortgage and won't affect your score as revolving debt.  Similarly, TU 04 is widely used, but not exclusively so.  There are still a large number of lenders who pull TU 98.  The vast majority of lenders use EX's v2.

Message 3 of 7
haulingthescoreup
Moderator Emerita

Re: Scoring of HELOCs vs HEL?


@MarineVietVet wrote:

Hello and welcome.

 

Our resident "expert" on this subject haulingthescoreup, AKA HTSU, should be along to explain this. You can also do a search here onsite about this subject.


lol, I did, answering OP's pm that was sent about the same time as your reply. HTSU has been on the road and in the air the past week. Smiley Tongue And FWIW, I do not * puffy heart * the new full-body security scanners at airports. Smiley Mad Nor do I * puffy heart * incredibly long airport concourses without those moving belt-thingies to help you get from point A to point B. Smiley Tongue Smiley Tongue

 

For the record, $50K HELOC's are definitely excluded from revolving util calcs. They are not treated like installment loans, as is commonly posted. As Lel mentioned, it varies how they're treated, but at least a $50K one won't hurt your util.

 

The cut-off for ignoring HELOC's and other revolving accounts like high-CL CC's varies by credit bureau, but $50K is definitely safe. 

 

 

eta: TU98 includes the balance due on a HELOC in the sim calculations, while EQ doesn't, and EX didn't back when we could see EX FICO's.

 

So even though the balance doesn't affect revolving util, TU98 looks at it (correctly, IMO) as part of your total revolving balances due. It doesn't seem to hurt particularly, though, at least not on my TU98 score. And since not many lenders use TU98 any more, I don't worry much about it.

* Credit is a wonderful servant, but a terrible master. * Who's the boss --you or your credit?
FICO's: EQ 781 - TU 793 - EX 779 (from PSECU) - Done credit hunting; having fun with credit gardening. - EQ 590 on 5/14/2007
Message 4 of 7
Lel
Moderator Emeritus

Re: Scoring of HELOCs vs HEL?

 


@haulingthescoreup wrote:

 

For the record, $50K HELOC's are definitely excluded from revolving util calcs. They are not treated like installment loans, as is commonly posted. As Lel mentioned, it varies how they're treated, but at least a $50K one won't hurt your util.

 

The cut-off for ignoring HELOC's and other revolving accounts like high-CL CC's varies by credit bureau, but $50K is definitely safe. 

 

 

eta: TU98 includes the balance due on a HELOC in the sim calculations, while EQ doesn't, and EX didn't back when we could see EX FICO's.

 

So even though the balance doesn't affect revolving util, TU98 looks at it (correctly, IMO) as part of your total revolving balances due. It doesn't seem to hurt particularly, though, at least not on my TU98 score. And since not many lenders use TU98 any more, I don't worry much about it.


 

There must be some cutoff at which TU98 doesn't include a HELOC with the total revolving debt.  My HELOC (current balance ~$77,000 of a $98,000 CL) is calculated as part of my mortgages, not revolving accounts.

 

Or maybe it has something to do with the fact that it is classified as a home equity loan under "loan type".  But I thought TU98 didn't factor in those descriptor fields.

 

Fuzzy and fuzzier, curious and curiouser.

Message 5 of 7
haulingthescoreup
Moderator Emerita

Re: Scoring of HELOCs vs HEL?

I should have clarified when I added the edit that I can only see this on the sim, when it says to pay down/ off any revolving balances.

 

So it's in that total, but it's not in util. And it's in the mortgage total on the Credit-at-a-Glance page. Which doesn't make sense, of course, but there you are!

* Credit is a wonderful servant, but a terrible master. * Who's the boss --you or your credit?
FICO's: EQ 781 - TU 793 - EX 779 (from PSECU) - Done credit hunting; having fun with credit gardening. - EQ 590 on 5/14/2007
Message 6 of 7
geronimo2008
Regular Contributor

Re: Scoring of HELOCs vs HEL?

I hav ea HELOC of $51.200.00.  EQ scores it as a mortgage loan.  TU is another matter.  It bounces back and forth between being considered  a mortgage and and a revolving line.   I am about to pay it off so it will be academic  (i hope) but Iome pretty serious swings in my TU score.

Message 7 of 7
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